At the beginning of the new year, cross-border e-commerce sellers encountered an unexpected "warehouse capacity crisis." Many Amazon FBA sellers have seen their storage limits dramatically reduced, with some experiencing cuts of up to 50%, exacerbating already tight inventory space during the crucial Lunar New Year restocking period.
Ongoing Capacity Reductions Leave Sellers Struggling
Multiple sellers report that storage capacity reductions continue to occur with alarming severity. "I woke up to find my capacity dropped from tens of thousands to just a few thousand units, with shipments already en route - it's devastating," one seller lamented. Another described waking up to find their account "suddenly showing a negative balance of over 10,000 units."
Even sellers with high Inventory Performance Index (IPI) scores haven't been spared. "With an IPI of 900, my capacity was still slashed from 30,000 to just 3,000 units with no avenue for appeal," complained one merchant. Several sellers report multiple consecutive cuts totaling tens of thousands in lost capacity, with some considering suspending operations entirely for an early holiday break.
Policy Changes Spark Speculation About Amazon's AWD Program
The frequent adjustments to storage policies have led to widespread speculation among sellers. Many believe Amazon is intentionally pushing sellers toward its Amazon Warehousing & Distribution (AWD) service.
Unofficial reports indicate AWD warehouses are primarily located in Los Angeles (3 facilities), Phoenix (2), Chicago (2), and New York (1), with two additional undisclosed locations. However, logistics experts reveal these facilities are still undergoing optimization, with some appointments booked through February and service quality reportedly inconsistent.
Multiple Challenges Create Precarious Situation
Beyond capacity cuts, sellers face additional pressures. Extended return periods may erode peak season profits, while domestic pandemic developments remain unpredictable. This convergence of factors leaves sellers navigating an exceptionally challenging business environment during what should be their most profitable season.
Proactive Measures to Address Capacity Issues
Sellers aren't without options when confronting these limitations:
- Submit support tickets: While success rates vary, some sellers have successfully appealed for increased capacity by providing detailed explanations of restocking needs, monthly sales data, and normal capacity requirements through Amazon's case system.
- Utilize third-party warehouses: Temporarily storing inventory in overseas facilities when FBA capacity is unavailable can prevent stockouts during critical periods. These warehouses also offer value-added services like returns processing and relabeling that can reduce losses on high-value merchandise.
Strategic Advantages of Overseas Warehousing
Third-party warehouses offer several key benefits for inventory management:
- Inventory flexibility: Provides buffer storage when FBA capacity is restricted
- Logistics efficiency: Reduces delivery times and improves customer satisfaction
- Cost management: Value-added services minimize losses on high-return or high-value products
When selecting warehouses, sellers should evaluate:
- Proximity to target markets
- Available service offerings
- Pricing structures
- Provider reputation and reliability
Industry Outlook and Adaptation Strategies
Amazon has yet to officially address the widespread capacity concerns. Industry analysts suggest the company may continue adjusting policies based on market conditions and operational requirements. Sellers are advised to monitor official announcements closely and remain flexible with inventory strategies.
Diversifying sales channels beyond Amazon's marketplace - including independent storefronts and alternative platforms - may provide additional stability during this period of uncertainty. As 2024 presents new challenges, adaptability and strategic planning will be essential for sellers navigating this competitive landscape.